Definition

1. Noun:
   • A corporate action that reduces the number of a company's outstanding shares without changing the total value of shareholders' equity: A reverse split consolidates existing shares into fewer, proportionally more valuable shares. It is the opposite of a traditional stock split.

Usage and Examples

• Noun:
  • The company announced a 1-for-10 reverse split to increase its share price and meet the exchange's minimum listing requirements.
  • After the reverse split, each shareholder received one new share for every five old shares they owned.
  • A reverse split does not, by itself, change the market capitalization of the firm.

Advanced Usage

• "to undergo a reverse split": to experience this corporate action.
  • The struggling biotech firm was forced to undergo a reverse split.
• "reverse split ratio": the specific consolidation ratio (e.g., 1-for-5, 1-for-10).
  • The board approved a reverse split ratio of 1-for-20.

Variants and Related Words

• Reverse stock split (n): A full term synonymous with "reverse split."
  • The reverse stock split became effective at the close of trading today.
• Share consolidation (n): A common alternative term, especially in British English.
• Stock merge (n): An informal term for the same action.

Synonyms

• Share consolidation
• Stock consolidation

Antonyms

• Stock split: A corporate action that increases the number of outstanding shares.
• Forward split: Another term for a traditional stock split.

Related Financial Terms

• Outstanding shares: The total number of shares of a corporation that are currently held by all its shareholders.
• Shareholders' equity: The owners' residual claim on assets after debts have been paid.
• Par value: The face value of a stock, which may be adjusted during a reverse split.

Noun

1. a decrease in the number of outstanding shares of a corporation without changing the shareholders' equity